Home owners to be moved off interest-only mortgages

treliac

Thrugelmir wrote: »

Costly? Borrowers are merely being asked to repay capital, which they will need to do so at some point in time.

Except that for a good few that 'some point' is some distant point in time when they think they will have inherited, be able to downsize and release equity or some other miracle will have occurred!

treliac

MikeJ74 wrote: »

Does anyone know what would happen to those who lose their job and then get the Gov to pay the interest on their mortgage?

What if they were not on an interest only mortgage? How long before the bank will forclose?

Generali wrote: »

The bank won't foreclose in those circumstances AIUI, they will stop asking the mortgagee to make capital repayments until they get a new job.

But is there an eventual time limit for benefits covering mortgage interest to cease?

neverdespairgirl

Generali wrote: »

The bank won't foreclose in those circumstances AIUI, they will stop asking the mortgagee to make capital repayments until they get a new job.

They certainly can't "foreclose" on a mortgage freehold!

Foreclosure is a lease-related issue.

Repossession, perhaps, you mean?

Thrugelmir

treliac wrote: »

Except that for a good few that 'some point' is some distant point in time when they think they will have inherited, be able to downsize and release equity or some other miracle will have occurred!

Miracle is an apt summary. On a wing and a prayer is my personal thought.

wherediditallgothen

RenovationMan wrote: »

This is very odd. My 5x salary mortgage is Interest Only and was arranged with Santander less than 3 months ago! They didn't even ask about a repayment vehicle. All I can assume is that I have 'sufficient equity' in my home (now 40% LTV) that they didn't feel the need to lay down the law with me.This all seems to be very politically rather than financially motivated to me.

Does anyone know if Santander and any other banks that follow suit will demand that their client's repayment vehicles are cashed in and paid onto the mortgage. Will they compensate their clients for the loss of interest and any redemption fees from cashing in repayment vehicles early?

I think in your case it's because you seem to be doing a great job of repaying the capital? Assuming of course that you are overpaying them now, and not stashing it to overpay in one lump sum?

This seems like a case of horse, stable door, bolted.

Generali

neverdespairgirl wrote: »

They certainly can't "foreclose" on a mortgage freehold!

Foreclosure is a lease-related issue.

Repossession, perhaps, you mean?

I am corrected.

Foreclosure presumably has a different specific meaning in Australia and the US. In both countries it seems to be used as the term to describe someone taking possession of collateral used to back a loan.

RenovationMan

wherediditallgothen wrote: »

I think in your case it's because you seem to be doing a great job of repaying the capital? Assuming of course that you are overpaying them now, and not stashing it to overpay in one lump sum?

This seems like a case of horse, stable door, bolted.

I'm overpaying 10% off the mortgage capital per year, which is the most Santander will allow, with the remainder sat in the bank waiting until next year when I can overpay another 10%. Santander didn't know about these overpayments when I first arranged the mortgage though.

A more reasonable approach would be to ask for information about repayment vehicles to see if they existed and were performing as necessary to repay the mortgage.

Naturally, as this is all about getting people onto new mortgage deals and off the banks SVR, there won't be a need to review repayment vehicles.

nearlynew

The vast majority of IO mortgages are taken out by people in order to lower the monthly payment enough for them to be able to move into a house that they otherwise couldn't afford.

100% fact and guaranteed.

MissMoneypenny

MikeJ74 wrote: »

Does anyone know what would happen to those who lose their job and then get the Gov to pay the interest on their mortgage?

What if they were not on an interest only mortgage? How long before the bank will forclose?

Get a mortgage protection policy. If you don't have one and lose your job, the key thing here is to get talking to your lender straight away. What they use to do before interest only mortgages came in, was to ask the borrower to make the up the difference from their benefits or savings. If they were unable to do that, then the difference in monthly payment was added to the total repayment amount (so they paid interest on this amount too).

I'm not sure how long the lender would let that go on for, but I guess it will be affected by LTV and whether house prices are rising or falling.

ninky_2

fortunately my IO deal is for the whole of policy. looks like i might be glad of those overpayments in to the savings pot though as things are ghostly on the work front.